CONTRACTS in The Music Industry

There are many different forms of contacts. This article looks briefly at eight of them, and in more detail about three of the main types of contract.

EIGHT main types

  1. Project/Band contract: Used if you do not want to do business as a soloists. Used to regulate tax and legal matters within the band. Will include details such as: Distribution of income, Band name rights, Distribution of jobs, withdrawal of band members, fatalities + deaths, insurance, possession of instrument/equipment, voting rights within the group.
  2. Transfer of Rights to musicians and singers contract: You would use this contract if you hire external musicians and singers. This contract regulates fess and profit sharing if necessary alongside the rights granted to the individual’s musician or singer.
  3. Contracts with Collection Societies and Publishers (If you are a Composer or lyricist):Called a contract of Assignment. Collecting payment for the use of your song with a cut of 10% to the collection agency. Contract states who has copyright shares.
  4. Record Deal:Rights of manufacturing, distribution and marketing of your music goes to the record company.
  5. Distribution contracts:made between record labels and distributors i.e. distribution areas, recordings covered, release costs and payment, transactions with collection societies, protective rights and stock management.
  6. Guest Performance Contracts (between promoter and you (artist) or your manager/agent):This contract states:

-Location and length of performance

-Fee and type of payment

-Duties of the artist and promoter

-Technical riders

-Costs

-Transport and logistics

-Cancellation agreement and related fees

-Insurance

-Social security and collection society contributions.

  1. Producer and Remix contracts: made between major labels and producers to statewho is responsible for the recording and payment or share in the profits in the form of royalties.
  2. Management and Agent contracts:Managers and Booking agents are separate firms which work in your name.

How do Contracts Operate?

- When you sign up to a company and sign a legal document between parties.

Who Issues contracts?

-Managers

-Promoters

-PRS

-Royalty Companies

-Recording labels

-Publishers

-Collection Societies

-Distributors

-Producers

How do you ensure Contracts are honoured?

Ensure that all parties adhere to all that is noted on the contract. If you don’t you can sue them for breach of contract and separate from the other party/company.

Tax + National Insurance Implications of being self – employed

If you are self-employed you have to pay National Insurance contributions. If you earn over a certain amount you must pay 2.75 per week, which pays for your pension, maternity allowance, statutory sick pay etc.

Legally you have to keep records for your business and income you get. (Accountant) Then you fill in a tax return annually where 20% of your earnings go to the government in the form of Tax. You must keep invoices of your sales/purchases and receipts of your business expenses, which will be deducted from your earnings. Bank records must also be kept. If you do not keep accurate records you could end up with a large fine, bankruptcy or a prison sentence for fraud.

THREE main contracts: Management, Publishing, Recording

Management Contract: This is the most important contract as you are permitting someone else to represent you and paying him or her for the privilege.

What is stated is this contract?

-Areas that your manager will represent you: Job expectations, promotions, getting gigs etc.

-Length of contract I.e. 1 year or more

-Performance clauses: if your manager has not got you a recording deal within a specified period.

-Commission, earnings and cash flow: Commission is generally 20% afters costs have been deducted. (I.e. promotional videos, recording costs, manager costs to advance your career, travel, accommodation etc.)

-Management fees – around 15 – 20%: expenses (Office, travel, accommodation) of your earnings. (Merchandise sales and royalty fees can sometimes bein the contract but are often separate)

Publishing Contract: Between composers and songwriters and publishing companies.

Every time your song is played, you’re owed a royalty. i.e. Radio: A fee payable to you from PRS.

What is stated is this contract?

-Length of Agreement -: 1 – 5 years

-Assignment of Copyright: Up to 70 years after your death

-Advances and Royalties: the publisher will pay you (Up to 70%/30% to the publisher)

Recording Contract: Legal agreement between a record label and a recording artist.

Once signed, you are obliged to record exclusively for a specific record label. If the record label commissions and pays for your recordings, they are the legal owner of these recordings (own copyright). Record companies put up hugh sums of money to produce, release and promote an album, (I.e. recording time, manufacturing, packaging, photos, distribution, marketing, music videos)

What is stated is this contract?

-How many singles/albums per year you must release

-How much you receive in advance I.e. all up front or at certain milestones (Recording, delivery, mastering process)

-Your royalty percentage I.e. 10 – 14 % of retail selling price as royalty to the band.

-Advances you get before record sales

-Licensing details

-Merchandising deals

-Sponsorship deals

-Termination of contract

Advantages and Disadvantages of Contracts

Advantages / Disadvantages
1. The other party will promote you, your music and your band / 1. Some parties get up to 20% of your earnings
2. Has contacts within the Music Industry that will benefit you / 2. If you get a poor manager/representative, you are stuck in the contract for a certain time period
3. You do not have to do a lot of the administrative work / 3. You must stick to the contract points or you will lose the manager or other party and therefore a lot of money will be lost and wasted
4. Job expectations are noted for you and third party making it very clear cut / 4. A Band member who writes songs can get a lot more money than the other musicians and this can cause conflict within bands
5. If any part of the contract is broken by the other party, you can walk away
6. Cash/advances up front which are then taken from your royalties once you start earning

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